The impending introduction of the National Living Wage is seen as a key challenge for SMEs who are looking to hire, new research from Indeed shows.

Over two-thirds of SMEs claim in the research that the new ruling, to be introduced in April 2016, will negatively impact their ability to hire and grow, while a quarter say that costs are already their biggest challenge when hiring.

The survey from Indeed also found that the industries struggling to find the right employees were legal services (68 per cent), travel and transport (52 per cent), and manufacturing (50 per cent).

The UK managing director of Indeed, Bill Richards, told Talk Business Magazine: “SMEs have less time and resources to devote to recruiting, making it increasingly difficult for them to compete with larger and more established companies for the best candidates. With staff costs rising, SMEs will need to find new efficiencies to maintain profit margins and ensure that they are still able to appeal to the most talented recruits.”

“It is promising to see that so many small companies are already embracing a flexible workforce as an effective way to overcome the challenges of hiring in today’s market. Thanks to their nimble structure, SMEs are in many ways better placed than larger companies to take advantage of this new breed of jobseeker, which could help them to counteract the impact of the National Living Wage.”

84 per cent of SMEs also depend on flexible workers, including freelancers, part-time and project staff, to overcome national shortages in skilled employees. The study also found that 44 per cent of those that hire freelance and flexible workers claim that this supports them to scale their business effectively.

Flexible working is also becoming an increasingly important way for SMEs to attract talent from larger rivals, with more than a third of SMEs saying that offering the option to work flexibly helped them attract the most talented employees.

The use of flexible staff varies widely across regions in the UK. The survey revealed that only a quarter of London-based SMEs are currently seeking support from flexible staff, compared to 93 per cent of North West SMEs who rely on a flexible workforce.

The failure to use mobile recruitment could also be impacting on UK SMEs ability to fill talent gaps. Only 9 per cent said that they currently optimise for mobile recruitment, putting them at a disadvantage. Indeed’s data shows that although over half of jobseekers rely on mobile for their job search, many SMEs are still relying on newspapers and personal contacts as their main means of hiring.

Richards explains the significance of mobile to today’s recruitment process, saying, “Listing jobs online and accepting mobile applications is crucial to reaching the best candidates. As this is where today’s job seekers are looking, this is where small businesses need to promote their roles. In order to attract the right talent and access the best pool of candidates, SMEs should embrace free online tools that offer mobile optimisation for recruitment.”